IBM slipped after Credit Suisse downgraded the tech giant to "underperform" from "neutral" and cut its price target on the Dow component to $175 from $200, saying organic growth would be challenging in the future.

On the economic front, the U.S. trade deficit fell 22.4 percent to $34.2 billion in June, narrowing to its lowest level in more than 3-1/2 years, according to the Commerce Department. Economists polled by Reuters had expected the trade deficit to narrow to $43.5 billion.

The Treasury Department is scheduled to auction $32 billion in three-year notes with the results available shortly after 1pm ET.

Meanwhile, comments from Chicago Fed President Charles Evans at 1 p.m. will be closely watched for any hint of when the central bank might begin tapering its bond purchasing program.

A report published by the British Retail Consortium showed U.K. retailers enjoyed their best July in six years. It followed better-than-expected services purchasing managers' index data on Monday, which revealed the sector grew at its fastest pace in more than six years last month.

In European earnings, French bank Credit Agricole reported a more than twelve fold gain in quarterly profit, pushing shares higher.

Meanwhile Japan's benchmark index reversing earlier losses to rally 1 percent as the yen weakened, while the rest of Asian stocks were mixed in choppy trade.

Australia's benchmark index was little changed after the Reserve Bank of Australia's policy decision. It cut interest rates by 25 basis points to a record low of 2.5 percent on, as widely expected. It marks the eighth rate cut since November 2011 when the central bank first acknowledged a growth slowdown as the country's decade-long mining boom began to fade.